Ghana makes temporary savings of $2bn following freeze on external debt servicing

Dr Ernest Addison, Governor of BoG
Dr Ernest Addison, Governor of BoG

Ghana made temporary savings of $2bn between January to September 2023, following its decision to unilaterally suspend all external debt servicing in December 2022 while it engages its international partners in debt treatment negotiations.

The West African state is looking to save some $10.5bn from this exercise as it seeks to bring its debt levels to 55% of GDP.

According to the report, the country’s current account recorded a surplus of $859.1mn by September, compared to a deficit of $2.5bn the same period last year. It has also helped to stem the slide of the cedi, which has fallen by only 2.5% between February and September after depreciating nearly 40% at one point last year.

Bank of Ghana governor Ernest Addison said the sharp improvement in the current account was a reflection of a significant reduction in external debt service payments on Eurobond, bilateral and some commercial loans.

Meanwhile, Ghana has missed a timeline set in the International Monetary Fund (IMF) programme to get a second tranche of a $3bn support package as negotiations with external creditors drag on.

The country received the first $600mn tranche of the three-year extended credit facility (ECF) in May, immediately after the IMF board formally approved the rescue loan amid Ghana’s worst economic crisis in a generation.

In early October, the IMF and Ghana’s government reached a staff-level agreement on the first review of the programme, paving the way for another $600mn tranche subject to board approval after it receives financing assurances.

Ghana has submitted proposals to its commercial creditors seeking a haircut of up to 40% and additional debt rework with bilateral creditors including China and the Paris Club.

The government is still engaging a bilateral Official Creditor Committee co-chaired by China and France, with an Memorandum of Understanding (MoU) expected to be signed soon to restructure debts of about $5.4bn.


Source: Daily Mail GH

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